08 - Macro Fundamental drivers 2 - M2 Money Supply

Question 1

How does the fed increase or decrease money supply

Answer 1

Increase by increasing banking reserves (allows banks to multiply their deposits and increase the amount of money)

Decrease by decreasing banking reserves

Question 2

Deflarionary, money… what bias

Answer 2

Increases in value, there is less of it, long bias

Question 3

Inflationary, money…. what bias

Answer 3

Decreases in value, there is more of it. Short bias

Question 4

Fed response to inflation: _________ bank reserves, currency __________ in value as it is a ___________ effect

Answer 4

Decrease bank reserves, deflationary, value of currency increases

Question 5

Fed response to deflation: _________ bank reserves, currency __________ in value as it is a ___________ effect

Answer 5

Increase bank reserves, inflationary, money losses value